After the virus: an economic future for Wales

Our economy in Wales was already facing difficulties. The Welsh economy’s long-term problems are well-documented; low productivity, a long-term lack of investment, a declining working-age population, significant public health issues. Add to that the likely effects of Brexit – especially a no-deal Brexit, which, on the basis of the OBR’s own figures, would be likely to deliver a severe productivity shock to the UK economy – and the effects of February’s floods, and even before the effects of lockdown are considered, it is clear that Wales was facing serious economic challenges. A recent report by the Centre for Towns and Southampton University suggests that 43% of towns in Wales are among the 10% of towns in the UK worst affected by the virus; the impact will be so much greater in Wales because our economy is already so weak.

The Governments in Westminster and Cardiff have put in place unprecedented support packages. But, in spite of Westminster Government promises to provide “whatever it takes”, a recent report from the Wales Governance Centre at Cardiff University suggests that there could be a shortfall of up to £500m in that support. Welsh businesses are experiencing delays in accessing support, while those forced on to Universal Credit are still having to wait five weeks to receive any money. Westminster needs to ensure that our response to the pandemic in Wales is properly funded – there is no excuse for cuts to Welsh services because Westminster won’t fund the Welsh Government in line with its pledges to provide “whatever it takes”.

And the most dangerous time for the Welsh economy is likely to come as those support packages are withdrawn. Wales is pre-eminently a nation of small businesses operating in towns – SMEs provide more than 60 per cent of Welsh jobs and will be the driver of the post-Covid 19 recovery.

The fear is that we simply cannot return to the austerity measures we adopted to deal with the 2008 crash. The world has changed; this is no time for “business as usual”. In the liberal tradition of Keynes and Beveridge, Liberal Democrats must lead the debate about our economic future.

* Jane Dodds is Leader of the Welsh Liberal Democrats

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3 Comments

  • Rif Winfield 6th May '20 - 10:04am

    Well said, Jane!
    The campaign must be two-edged. Firstly, a national Keynesian strategy of public works to restore the infrastructural and environbmental damage (not just that from the coronavirus era, but going back for decades of neglect). Secondly, a fresh look at Beveridge’s thought as regards the socio-economic health of communities everywhere; and this must include the adoption of national minimum income payable to every adult.
    Regards,
    Rif (Ceredigion)

  • Peter Martin 6th May '20 - 10:30am

    “must include the adoption of national minimum income payable to every adult”

    It won’t work.

    Say you decided to top up everyone’s income to £10k pa. You’ve simply created a situation where there really isn’t any point going out to work for many lower paid workers.

    Those who do decide to work for relatively low salaries will be resentful of those who don’t but receive the same or similar incomes. Any successful system needs to have public support and this won’t.

  • John Probert 6th May '20 - 12:06pm

    To boost the Welsh economy relaunching the Swansea Bay tidal barrage scheme would be a good place to start, so why not get on with it?

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